Association for Public Policy Analysis & Management

California’s cap-and-trade program is hailed as one of the most important sub-national steps to limit the effects of climate change, creating globally shared benefits. Yet the program is also seen as a critical mechanism to reduce local air pollution in California. While these two outcomes are generally seen as mutually reinforcing at the aggregate level, this may not be the case at the local level. Debate surrounding the renewal of California’s cap-and-trade has drawn attention to the environmental justice argument that market-based mechanisms do not guarantee reduced emissions in air pollution “hotspots” and may disproportionately affect low income and minority communities. In other words, while cap-and-trade may cost-effectively achieve carbon emission reductions, it may not be a cost-effective policy to address air quality in all local communities. By assessing the variation of air pollution costs and benefits under cap-and-trade, this work will contribute to the literature on the distributional effects of climate change policies across state and local communities.

Recent studies of California’s cap-and-trade program have focused on carbon and criteria air pollutant emission trends across communities in California but have not explored the air quality and health implications of trends in emissions. This research studies the distribution of air pollution co-benefits (or co-harms) resulting from shifts in local pollutant emissions induced by California’s cap-and-trade program. We model the emissions behavior of more than 500 industrial point source polluters regulated under the cap-and-trade market, estimating facility-level marginal abatement curves for carbon and the associated particulate matter (PM_2.5) emissions for different levels of carbon emissions. We couple this with a reduced-complexity air pollution model, InMap, to assess how changes in PM_2.5 emissions impact premature mortality due to chronic exposure to PM_2.5. Because local air pollutants, PM_2.5 in particular, impact individuals disproportionately (e.g. due to differential exposure or preexisting conditions), emergency room visit records from California's Office of Statewide Health Planning and Development are used to assess individual-level air pollution-related health damages, allowing us to disaggregate impacts for low-income and minority groups. This research will provide a comprehensive evaluation of the local marginal health effects of California’s cap-and-trade on air pollution exposure across subpopulations and can inform the design of evidence-based policies to simultaneously address global climate change and local air quality.